Introduction
Central bank digital currencies (CBDCs) are at the forefront of the monetary revolution. However, there’s a need for countries to address and rectify unclear or outdated legal provisions that may pose challenges to their successful deployment.
The BIS Stance
Agustin Carstens, the General Manager of the Bank for International Settlements (BIS), expressed concerns on the existing legal roadblocks. He remarked that countries must prioritize establishing comprehensive legal frameworks that encourage and regulate CBDC operations. During his address at a Swiss conference, Carstens emphasized the importance of meeting public demands and expectations regarding digital money forms.
Current Legal Challenges
An International Monetary Fund (IMF) paper from 2020 highlighted that approximately 80% of the world’s central banks are either restricted from issuing a CBDC due to current laws or are grappling with ambiguous legal guidelines concerning CBDCs. Such barriers can stifle innovation and hinder the potential advantages that CBDCs bring to the table.
Global Engagement in CBDC Initiatives
Despite these challenges, central banks have shown a growing interest in exploring the CBDC domain. According to a 2022 BIS survey, a whopping 93% of central banks globally have embarked on some form of CBDC-related activity. The BIS itself has taken proactive steps by conducting several CBDC experiments. Furthermore, the bank has also advocated for nations to engage in mutual collaboration when sculpting their CBDC strategies.
Conclusion
CBDCs promise a new era of monetary policies and digital financial inclusivity. For them to realize their full potential, countries should prioritize creating clear and supportive legal infrastructures. Stakeholders, including central banks and international financial organizations, need to join forces to pave the way for a seamless CBDC future.
